Health insurers brace for unknown heading into marketplace

Health insurers refer to the final days leading into October as a "silent auction."

By now, insurers participating in Pennsylvania's health insurance marketplace know the list of products their companies plans to offer and the rates they will charge.

But until Tuesday, when federal officials post the available products and rates online, insurance companies won't know how their plans compare to those being offered by competitors.

"It's an unprecedented market dynamic," said Suzanne M. Fletcher, vice president of finance and administrative services at Blue Cross of Northeastern Pennsylvania. "It's absolutely a wait-and-see (at) how well we positioned (ourselves) in the marketplace, and how individuals and small groups are going to react to what our offerings are."

Across the nation, Tuesday marks the launch date for the federal health insurance marketplace's open enrollment period, in which Americans can compare health plans based on price, benefits and other elements, and find out if they are eligible for subsidized coverage.

A key provision of the Affordable Care Act, the marketplace provides individuals earning between 100 and 400 percent of the Federal Poverty Level - $11,500 to about $45,960 - access to financial assistance through premium tax credits.

Though coverage won't begin until Jan. 1, for many insurance companies Tuesday signals the culmination of more than two years' worth of work in preparing for the overhauled health care landscape.

"Looking at what was required from a benefit perspective, (and) what the filing requirements were, it was really a mad dash and scramble to get things up and running in preparation for Oct. 1," said David Brady, vice president of health care reform and commercial business development at Geisinger Health Plan.

Without elaborating on their offerings, insurers said rules set forth in the health reform law shaped, in large part, how they could price products.

All qualified health plans must include at least 10 categories of essential health benefits, such as hospitalization, prescription drugs, maternity and newborn care and mental health and substance use disorder services.

The law also ended the common practice of charging higher premiums to people based on health status and limited insurers' ability to price-discriminate for five factors: age, tobacco use, geographic location, family size and the actuarial value of the plan.

And starting in 2014, the law imposes a 3-to-1 rate band on age, meaning insurers can no longer charge the oldest person in the risk pool five or even seven times as much as the youngest.

"The seniors are big winners," said Nancy Chockley, president and chief executive officer at National Institute for Health Care Management. "Young people (will) pay more, but the benefit is that old people will pay less than their actuarial value â¦ their true expected costs."

Though insurers have set expectations for how many people will purchase their plans through the marketplace, a number of variables make it impossible to predict an outcome for the companies, officials said.

"You can't predict what real behavior will be," said Ms. Fletcher, who also serves as Blue Cross of Northeast Pennsylvania's program leader for health care reform. "A lot of it will have to do with the information that's out there and available to people who are interested, and whether or not they even know and understand what they need to do if they don't have insurance."

About 78 percent of uninsured people don't know about the new health insurance marketplace, while 83 percent of people who could be eligible for Medicaid coverage under an expansion don't know about the opportunity, according to Enroll America, a nonprofit group focusing on outreach and education.

Because of the general population's relative unfamiliarity with all of the law's intricacies, many insurers have created educational advertisements to inform the public.

"Of course we want to try and generate as much business and membership as we can, but really it's about making sure the people have the right information they need to make the right decision," Mr. Brady said.

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